SHANSON SHAJI15-PEC-25

PUBLIC ECONOMICSVERSION 2.O

WELCOME TO ALL

UNION EXCISE

Definition: Union excise duty is a type of indirect tax on goods manufactured in India. 

Description: Union excise duties are levied in accordance with the rates mentioned in Schedule I and II of the Central Excise Tariff Act, 1985. The taxable event here is the 'Manufacture'. 

The burden of taxation is, however, passed on to the consumers by the manufacturer. When the rate of valuation is on ad valorem basis, the following methods are employed for the valuation of the excisable goods: 

Transaction value Value determined on the basis of Maximum Retail Sale Price as per Section 4A of the Central Excise Act 1944. Tariff value under Section 3, if applicable. 

CONSTITUTION OF INDIA

DOMESTIC TRADE TAX

EXCISE DUTY

SERVICE TAX

Power to levy and collect

union excise duty

Goods and products manufacture in India other than alcohol ,liquors and

narcotics and taxable under union excise duty

EXCISE DUTY

An excise is considered an indirect tax, meaning that the producer or seller who pays the tax to the government is expected to try to recover or shift the tax by raising the price paid by the buyer. Excises are typically imposed in addition to another indirect tax such as a sales tax or value added tax (VAT). In common terminology (but not necessarily in law), an excise is distinguished from a sales tax or VAT in three ways:

An excise typically applies to a narrower range of products. An excise is typically heavier, accounting for a higher fraction of the

retail price of the targeted products. An excise is typically a per unit tax, costing a specific amount for a

volume or unit of the item purchased, whereas a sales tax or VAT is an ad valorem tax and proportional to the price of the good.

Union excise duty is an important sources of revenue for the union government.

While the coverage of union excise duty was expanded has changed over time and its structure has changed Since independence.

Excise duties were imposed on the domestic production of commodities.

Excise has been collected from India in ancient times . Modern excise system began in the country in 1894. In between 1896 and 1926 two excise levies were imposed

namely on motor sprit and kerosene. In 1934 the 1st step in the rational of excise levies and

extention of their coverage (Sugar , Matches, Steel e.t.c were brought under excise.)

1974-75 Around 128 commodity were group under different tariff item subject to excise.

AN OUT LINE OF L.K.JHA COMMITTEE 1963

The Central government announced the MODVAT scheme (modified Value Added Tax) in March 1986. With effect from 1st March 1994, this scheme has been extended to petroleum goods (except SBP/Hexane/HSD/MS) which are used as an input in the manufacture of other excisable goods.

MODVAT (Modified Value Added Tax) is a unique system under Central Excise Rules that permits manufacturers of excisable goods to avail credit of duty paid on the notified inputs received and used in or in relation to the manufacture of final products and to utilise such credit towards the duty liability on removal of final goods.

The purpose of the MODVAT scheme is to avoid cascading effect of taxes i.e. double taxation on inputs as well as final products.

SHANSON

SHAJI